Joint Life Insurance: Best Options for Canadian Couples in 2023

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Ivana Govedarica
Certified Life Insurance Advisor
In This Article

Key takeaways

  • Joint life insurance insures two people's lives and pays one death benefit. 
  • The main types of life insurance for couples are joint first-to-die, joint last-to-die and individual policies.
  • A joint life insurance policy can be cheaper, but couples can get more flexibility from individual coverage.
  • Joint life insurance policies are tricky to split up if the couple breaks up, separates or gets divorced.

What is joint life insurance?

Joint life insurance is a single policy that covers two people, usually spouses or common-law partners.

If one partner passes away while the policy's active, the beneficiary gets a tax-free, lump-sum payment that they can spend however they wish.

A chart that explains what joint life insurance is as well as the difference between joint first-to-die, joint last-to-die and individual life insurance.

The key flaws with joint life insurance for couples? While joint policies can sometimes be cheaper, they only pay a death benefit out once. And if you ever break up, separate or get divorced, splitting the policy up can be a big headache.

How does joint life insurance work in Canada?

Joint life insurance provides a financial safety net for your partner (or other dependents) if you pass away. 

Here's how joint life insurance works in Canada:

  • The couple applies at the same time
  • The couple pays one premium per month, with only one death benefit payout.
  • The policy expires after the payout so the surviving spouse will need to apply for another policy if they need insurance coverage.
  • Both partners are covered under the same exact terms (coverage amounts, term lengths, etc.).

And take note that joint life insurance can be either temporary or permanent.

  1. Permanent life insurance: covers you for your entire life. It can have a cash value component that earns interest and grows over time.
  2. Term life insurance: provides for “temporary” dependents, like your kids before they grow into adulthood. It's also useful when debt, like your mortgage, is at its highest.

What type should you get? Permanent life insurance (i.e. whole or universal) can be a good option for high-net-worth individuals with complex estate planning needs.

Term works best for couples and families with young kids. PolicyMe has some of Canada's most affordable term rates, plus $10,000 in free child coverage. Apply together and save:

What happens to a joint life insurance policy after divorce?

A joint life insurance policy can be tough to divide if you and your partner decide to divorce or separate.

Here are your options if you need to split up a joint policy:

  • Name each spouse as the beneficiary in trust to manage the financial benefit on behalf of the kids
  • Keep the policy as-is (i.e. forgo splitting it)
  • Transfer the policy to one spouse
  • Cancel the policy outright

What are the 3 main types of life insurance for couples?

There are three main types of joint life insurance policies:

  • First-to-die joint life insurance
  • Last-to-die joint life insurance
  • Combined individual life insurance

Joint first-to-die life insurance

Joint first-to-die is a type of life insurance policy that pays out a death benefit when the first partner passes. The policy ends after the payout, so the surviving partner would have to apply for a new policy if they want one.

A first-to-die policy can cover expenses such as a mortgage, debts or childcare.

Joint first-to-die may be a good choice if you have:

  • Living expenses paid for by one person
  • Large financial obligations (like a mortgage)

What is the main drawback for this type of joint coverage? Once there's a payout after the first death, the policy is no longer active. If the surviving partner wants coverage, they'd have to buy a new policy. 

Joint last-to-die life insurance

Joint last-to-die life insurance pays out a death benefit when the last surviving partner passes. Last-to-die is also called survivorship life insurance.

This type of policy is best used to support the couple's kids because the surviving partner doesn't get a payout when the first person passes.

Joint last-to-die may be a good choice if you're concerned about:

  • Your beneficiaries paying estate and inheritance taxes
  • Leaving savings behind for your loved ones

The couple can name their children as the beneficiary to ensure financial stability after both parents are gone. It can also be used to reduce any estate taxes and reduce end-of-life costs for the surviving family (like funeral expenses). 

The bottom line? Joint last-to-die policies are best used for complex estate planning purposes. Couples can use a last-to-die policy to ensure their children's future.

Combined life insurance

Combined life insurance isn't a joint policy at all; it joins two single life insurance policies with different terms, conditions and payouts. When each partner holds their own policy, two separate death benefits can be paid out.

Here’s how these three main types of coverage for couples compare:

Chart comparing types of joint life insurance policies for article about single vs. joint life insurance

Combining two individual life insurance policies is generally a safer and more flexible choice. Both partners hold their own policies on their own terms.

Get the best of both worlds with PolicyMe: couples can apply together online for separate individual policies and save money in the process.

Joint vs individual life insurance

Joint life insurance is a single policy that covers two people, with one premium. A joint life insurance policy can be cheaper than buying two separate individual life insurance policies.

But on the flip side, individual life insurance gives you the flexibility to pick different lengths, conditions and coverage amounts for you and your partner.

A joint life insurance policy is the better option if:

  • You and your partner have a big age gap
  • One of you is in poor health
  • One partner is financially reliant on the other
  • You have just one main shared debt, like a mortgage

Individual life insurance policies are the better option if:

  • You want different levels of coverage
  • You want to shop around; there are lots of term options
  • You're 40 or younger
  • You want to skip the headache of splitting the policy if you break up

The long and short of it is that joint life insurance is best suited for couples in very specific life situations. It's usually a better idea for each partner/spouse to get a single life insurance policy that is tailored to your particular needs.

Here's a point-for-point look at the advantages and disadvantages of joint life insurance:

Joint life insurance: pros and cons

A joint life insurance policy can be cheaper and more simple to apply for, but once you're locked in, there's not a lot of flexibility.

How much life insurance coverage do married couples need?

The amount of life insurance a married couple needs will depend on a few different factors. For example, things like debts, income, financial obligations, existing policies, etc. will play into how much coverage is needed.

joint life insurance for couples - how much life insurance do couples need sample questions

These questions will help you think about how much life insurance you need for your family’s financial well-being in the face of an unexpected death. 

Sample questions for evaluating life insurance needs:

  • In your absence, do you need mortgage payments covered?
  • What other large debts, loans, etc. would you leave behind?
  • Would you want to cover final expenses?
  • If you have kids, how many years of financial security will you leave them? What about their education/tuition?
  • How long does your partner or spouse have until they retire?
  • Would they need an income replacement without you around?

Calculate how much income you'd need to provide for your family, along with an estimate of how long that coverage will be necessary to keep your family afloat.

Generally, coverage amounts can range between five to 10 times the holder's salary. The average Canadian household is insured for about $442,000, reports the Canadian Life & Health Insurance Association.

Where do you buy joint life insurance in Canada?

There are a few life insurance companies where you can buy joint life insurance policies in Canada:

  1. BMO: The "Special Death Benefit Option” means you can get a death benefit on the first death while having a joint-last-to-die policy.
  2. Canada Life: Choose from multiple riders to add to your joint policy, such as child coverage.
  3. ivari Life: Offers the option of joint policies for up to five people, but prices that are higher on average.
  4. Manulife: Affordable joint policies and an extra 3% in savings for couples who choose the same policy length and coverage amount.
  5. UV Insurance: The only carrier in Canada that offers joint first-to-die term life insurance without a medical exam.
  6. PolicyMe: We don't offer joint policies, but a first-year 10% discount on premiums when couples apply together, with $10,000 in free child coverage for the whole term.

How much does life insurance cost for couples?

How much would a life insurance premium cost for couples' coverage? Here's a sample quote for life insurance for couples from PolicyMe to help you get an idea:

$13.21 per month for partner 1 (woman), $16.89 per month for partner 2 (man). These rates are for the first year with the 10 per cent couples discount, based on a 20-year term policy for $250,000 coverage.

Bottom line: individual and joint life insurance for couples

  • It's essential to have a policy in place for you and your partner to protect your family financially if something happens.
  • You and your spouse can choose to separate flexible life insurance policies or get joint life insurance coverage.
  • You save 10 per cent on the first year of premiums when you and your partner apply together with PolicyMe (and free child coverage!).

FAQ: Joint life insurance in Canada

Does joint life insurance pay out twice?

Whether joint life insurance pays out twice depends on the type of joint life insurance you hold. For example, first-to-die and last-to-die insurance will payout the entire death benefit just once because they operate as one policy covering two people. 

However, combined life insurance does pay out twice. It's when you and your spouse opt for two separate policies from the same insurance company at the same time. Essentially, two policies = two death benefit payouts.

What is family life insurance?

Family life insurance isn’t a specific type of life insurance coverage, but a term that insurance companies can use for life insurance plans geared toward families. Think of this as a provider-created package deal.

One example is bundling a term life insurance policy with a child life protection rider. But broadly speaking, knowing how much life insurance your family needs for financial protection will help you select coverage that makes sense for you – whether or not the word “family” is on the tin.

What is spouse life insurance?

Spouse life insurance sets up a death benefit for the surviving spouse. Some life insurance companies also offer a spousal rider, covering the policyholder’s spouse. Generally, the coverage amounts for a spousal rider are much smaller than a joint policy or two separate policies.

How much coverage your spouse needs will depend on how much you rely on your spouse for financial support. Think about things like your shared monthly expenses, your housing costs, childcare costs, etc.

Do you need life insurance when you get married? 

Married couples don't necessarily need life insurance to complete the marriage. The purpose of life insurance is to leave behind a financial safety net for your family in case you or your partner passes.

If you're married and have shared financial obligations, like a mortgage or young kids, it's a good idea to consider getting life insurance. That way, your family will have a monetary cushion if you weren't there to support them.

Do you need life insurance as a stay-at-home parent?

As a stay-at-home parent, the decision to buy life insurance should be based on your individual circumstances. You may not have a “traditional” income to replace, but consider the financial contributions you make to your family. 

Without you, your family may have to pay for everything you do in order to run your home, like childcare for example. And if you were to pass away, your family may face unexpected expenses like funeral costs or medical bills. 

Ultimately, the decision to purchase life insurance should be based on your unique situation, but don’t discount your financial contribution as a stay-at-home parent! 

When is the best time for couples to get life insurance?

The best time for couples to get life insurance is when either of them depends on the other's income. Are you in a relationship with shared financial obligations and dependents in your care?

If so, it's time to consider couples' life insurance. The sooner you get coverage, the better. 

You're likely to be healthier at this stage of life, and less risky to insure. Life insurance rates go up as you grow up, so it makes sense to lock  your rate in. 

And term life insurance policies for young families can be quite affordable. In a recent survey, we found that while 77 per cent of Canadian parents have life insurance, many either have: 

  • Inadequate coverage (i.e. a group insurance plan through their employer)
  • Unnecessary coverage (i.e. permanent life insurance or life insurance policies on their child)

Do couples need to buy life insurance policies from the same company?

You and your partner won't always buy your policies from the same insurance company, as is the case with joint and combined life insurance. This may happen when one partner gets approved with one insurer but the other doesn't, and has to get their life insurance elsewhere.

For example, if one of you poses a higher risk to the insurer and is declined coverage. For example, if you have a pre-existing condition, have a criminal record or driving incidents on record.

In which case it makes sense for that partner to look into a "no medical" life insurance policy. But those kinds of policies are more costly, so it's a better idea to mix-and-match your couples coverage with single life insurance policies.

Our sources:

ACCAP - Canadian life and Health Insurance Facts, 2022 edition. CLHIA. (n.d.).

Survey Reveals Parents' Biggest Life Insurance Mistakes. PolicyMe. McKay, Laura.

WinQuote Canadian Products. WinQuote by Equisoft. Accessed May 2023.

Laura McKay

COO & Co-Founder

About the Author

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